Endowments NCSR Certified annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

Certified Shareholder Report of

Registered Management Investment Companies

Investment Company Act File Number: 811-01884

Endowments

(Exact Name of Registrant as specified in charter)

P.O. Box 7650, One Market, Steuart Tower

San Francisco, California 94120

(Address of principal executive offices)

Registrant's telephone number, including area code: (415) 421-9360

Date of fiscal year end: July 31

Date of reporting period: July 31, 2006

Patrick F. Quan

Capital Research and Management Company

P.O. Box 7650, One Market, Steuart Tower

San Francisco, California 94120

(name and address of agent for service)

Copies to:

Julie Allecta

Paul, Hastings, Janofsky & Walker LLP

55 Second Street

Twenty-Fourth Floor

San Francisco, California 94105

(Counsel for the Registrant)

ITEM 1 - Reports to Stockholders

[logo - Capital Research and Management^SM]

Endowments

Investments for nonprofit institutions

Annual report for the year ended July 31, 2006

Endowments^SM

Endowments is managed by Capital Research and Management Company,^SM which also manages the 29 American Funds.^® The American Funds organization ranks among the nation’s three largest mutual fund families. For nearly 75 years, Capital Research has invested with a long-term focus based on thorough research and attention to risk.

Growth and Income Portfolio seeks to provide long-term growth of principal, with income and preservation of capital as secondary objectives, primarily through investments in common stocks.

Bond Portfolio seeks to provide as high a level of current income as is consistent with the preservation of capital through investments in fixed-income securities.

Figures shown are past results and are not predictive of results in future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. Investing for short periods makes losses more likely. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity. For current information and month-end results, visit americanfunds.com/endowments.

Here are returns on a $1,000 investment with all distributions reinvested for periods ended June 30, 2006 (the most recent calendar quarter):

	1 year			5 years			10 years
Growth and Income Portfolio
Average annual total return		—			+5.85	%		+10.02	%
Cumulative total return		+6.48	%		+32.89	%		+159.86	%
Bond Portfolio
Average annual total return		—			+5.55	%		+6.23	%
Cumulative total return		+0.18	%		+31.00	%		+82.95	%

The funds’ investment adviser waived 5% of its management fees from September 1, 2004, through March 31, 2005, and increased the waiver to 10% on April 1, 2005. Fund results shown reflect the waiver, without which they would have been lower. Please see the Financial Highlights tables on page 17 for details.

Bond Portfolio’s 30-day yield as of August 31, 2006, calculated in accordance with the Securities and Exchange Commission formula, was 5.25%, which reflects a fee waiver (5.20% without the fee waiver).

The return of principal in the Bond Portfolio is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bonds owned by the fund.

[Begin Sidebar]

Results at a glance

(for full fiscal years ending 7/31/76-7/31/06)

	Growth and Income Portfolio		Bond Portfolio

1976	+27.7	%	+12.1	%
1977	+6.4		+12.6
1978	+10.4		+0.7
1979	+10.1		+7.0
1980	+17.2		+3.6
1981	+15.3		-4.5
1982	-3.8		+18.4
1983	+56.0		+23.9
1984	-0.4		+7.9
1985	+30.5		+20.6
1986	+25.4		+21.0
1987	+20.2		+4.4
1988	-2.4		+8.6
1989	+23.2		+13.7
1990	+4.1		+6.9
1991	+15.0		+10.8
1992	+15.7		+18.7
1993	+10.0		+11.7
1994	+2.8		-1.4
1995	+18.6		+8.0
1996	+13.2		+6.3
1997	+38.4		+10.8
1998	+9.1		+6.7
1999	+18.2		+1.7
2000	-3.3		+5.1
2001	+18.2		+12.7
2002	-8.6		+2.8
2003	+10.2		+10.6
2004	+13.8		+6.4
2005	+10.3		+5.1
2006	+4.6		+1.9
Average annual
total return*	+13.0	%	+8.7	%

*From July 26, 1975, when Capital Research and Management Company became the investment adviser of the funds’ assets, through July 31, 2006.

Results show total returns measuring capital appreciation and income return, assuming reinvestment of dividends and capital gain distributions.

[End Sidebar]

Dear shareholders:

We are pleased to report to you at the close of our 2006 fiscal year.

Growth and Income Portfolio

For the 12 months ended July 31, 2006, the value of an investment in the Growth and Income Portfolio rose 4.6%.* Over the same period, the unmanaged Standard & Poor’s 500 Composite Index gained 5.4% and the Lipper Growth & Income Funds Index rose 7.4%.

*All percentage gain/loss figures used throughout this letter include reinvestment of distributions.

In many respects, the trends evident in the prior fiscal year continued into the current year. The price of oil rose again, reaching more than $75 a barrel at fiscal year-end. This, combined with a relatively strong economy, caused inflation to rise above 4%. In response, the Federal Reserve continued to raise the federal funds rate, which currently stands at 5.25%. These factors created an environment in which it was difficult for investors to earn a real return, after inflation, in any asset class.

Given this background, it was somewhat surprising that the economy remained quite strong. Real Gross Domestic Product rose approximately 3.5% during the 12-month period. As a result, corporate profitability and dividend growth remained excellent, with corporate profit margins at or near record levels. We would expect to see some slowing in economic growth that may well be accompanied by pressure on corporate profit margins.

Within the portfolio, our oil stocks performed well. Top 10 holdings ExxonMobil and Chevron both showed double-digit gains. In addition, our non-U.S. holdings did quite well as weakness of the dollar and strong foreign markets had a favorable impact. On the negative side, our holdings in both the retail and technology sectors were clear disappointments.

During the period, we added to our information technology, health care and energy holdings. Information technology remains the largest sector in the portfolio at 15.4%. These additions were funded in part by a reduction in our exposure to industrial stocks from 9.1% of the portfolio at the beginning of the year to 6.5%.

The portfolio’s relative results over the past two years have not met our expectations. This is attributable to the underperformance of many of the stocks of large, well-established companies. This class of stocks became extremely overvalued in the late 1990s when we owned very few of them. As noted in last year’s report, we began acquiring positions in many of these equities in recent years as they began to meet our valuation criteria. Consistent with our research-driven process, we have continued to add to them during this period of weakness and believe that they offer significant potential for long-term investors. As you can see on page 4, this disciplined approach has served the portfolio well over many years.

The percentage of assets invested in equities was 86% at July 31, down from 89% at the beginning of the fiscal year. The remainder was held in interest-bearing cash equivalents.

Bond Portfolio

For the 12 months ended July 31, 2006, the value of an investment in the Bond Portfolio rose 1.9%. During the period, the unmanaged Lehman Brothers Aggregate Bond Index reported a gain of 1.5%, while the return for the Lipper Corporate Debt A-Rated Funds Average was 0.8%.

Throughout the year, the Federal Reserve maintained its policy of measured tightening, raising the federal funds rate a quarter point at each of its scheduled meetings. Since June 2004, the Fed has hiked this overnight lending rate 17 times, bringing it to 5.25% by the close of the fiscal year. These moves constitute the longest uninterrupted streak of increases by the Fed in more than a decade. At its August 2006 meeting, after the close of the fiscal year, the Fed paused, but cautioned the market that additional increases may still be necessary if inflation continues to rise.

The combination of Fed rate hikes and inflation pressures lifted bond yields across the maturity spectrum and broadly dampened returns. Though yields rose across all maturities, short-term bond prices were less impacted, resulting in higher overall returns than either intermediate- or long-term bonds provided. The fund’s shorter portfolio structure contributed to better comparative results for the fiscal year. By the end of the fiscal year, however, the average maturity of the portfolio had been extended moderately to 6.0 years from 5.3 years.

The Bond Portfolio only invests in bonds with an investment-grade rating (BBB or better) at time of purchase. About 37% of portfolio holdings were rated AAA at year-end, up from 32% a year ago. For the year, AAA-rated bonds produced slightly better returns than other investment-grade categories. Bonds in this category include portfolio holdings in mortgage- and asset-backed securities, two sectors of the market that held up well as others weakened.

The Bond Portfolio has a significant exposure to corporate bonds, totaling 46% of fund assets. In a period during which corporates produced mixed results, our research analysts found pockets of strength that benefited the portfolio. Additionally, we remain encouraged by the substantial progress that many corporations have made over the past five years in reducing leverage and repairing balance sheets. We believe our corporate holdings are fundamentally solid, offering good long-term values and an important source of income.

In total, the Bond Portfolio held roughly 95% of assets in fixed-income obligations at the close of the fiscal year, about the same as that of last year. The balance was held in interest-bearing cash equivalents.

Though bond prices have weakened somewhat during the past year, our outlook remains positive. We look for new opportunities whenever the market softens and focus our research on the long-term viability of the obligations we buy. This perspective has helped to limit volatility in the Bond Portfolio and produce results that serve the long-term needs of nonprofit shareholders.

Cordially,

/s/ Robert G. O'Donnell

Robert G. O’Donnell

Vice Chairman of the Board and Principal Executive Officer

/s/ John H. Smet

John H. Smet

President

September 14, 2006

For current information about the fund, visit americanfunds.com/endowments.

The value of a long-term perspective

(Growth of a $50,000 investment under Capital Research and Management Company’s stewardship, 7/26/75-7/31/06)

Growth and Income Portfolio

Average annual total returns based on a $1,000 investment
(for periods ended July 31, 2006)*

Lifetime	+13.0%¹
10 years	+10.4
5 years	+5.8
1 year	+4.6

*Assumes reinvestment of all distributions.

Year ended July 31	Growth and Income Portfolio		Lipper Growth & Income Funds Index		Standard & Poor’s 500 Composite Index with dividends reinvested

07/25/75	$	50,000	$	50,000	$	50,000
07/31/75		49,770		50,000		49,871
07/31/76		63,476		60,735		60,467
07/31/77		67,590		62,434		60,350
07/31/78		74,525		69,272		64,777
07/31/79		82,131		77,106		70,508
07/31/80		96,277		95,121		87,260
07/31/81		110,942		108,452		98,601
07/31/82		106,860		98,876		85,511
07/31/83		166,726		154,488		136,183
07/31/84		166,164		146,807		132,141
07/31/85		216,743		193,372		174,975
07/31/86		272,165		243,630		224,681
07/31/87		326,898		319,222		312,963
07/31/88		319,361		296,921		276,178
07/31/89		393,517		375,359		364,261
07/31/90		409,757		381,311		387,824
07/31/91		471,346		423,790		437,201
07/31/92		545,557		476,028		493,020
07/31/93		600,375		539,269		535,967
07/31/94		617,007		572,677		563,582
07/31/95		731,592		688,356		710,508
07/31/96		828,273		778,692		828,122
07/31/97		1,146,319		1,122,337		1,259,661
07/31/98		1,250,106		1,247,665		1,502,488
07/31/99		1,477,738		1,410,710		1,806,129
07/31/00		1,428,818		1,438,119		1,968,146
07/31/01		1,689,291		1,407,164		1,686,257
07/31/02		1,544,010		1,138,044		1,288,040
07/31/03		1,701,152		1,244,809		1,425,050
07/31/04		1,936,007		1,420,204		1,612,612
07/31/05		2,136,028		1,640,110		1,839,094
07/31/06		2,234,591		1,761,639		1,937,955

Bond Portfolio

Average annual total returns based on a $1,000 investment
(for periods ended July 31, 2006)*

Lifetime	+8.7%¹
10 years	+6.3
5 years	+5.3
1 year	+1.9

*Assumes reinvestment of all distributions.

Year ended July 31	Bond Portfolio		Lipper A-Rated Bond Funds Index³		Lehman Brothers Aggregate Bond Index³

07/25/75	$	50,000	$	50,000	$	50,000
07/31/75		50,064		50,000		50,000
07/31/76		56,123		57,578		56,105
07/31/77		63,169		64,446		62,334
07/31/78		63,633		65,992		63,680
07/31/79		68,078		70,210		67,930
07/31/80		70,604		70,659		69,012
07/31/81		67,372		66,985		65,554
07/31/82		79,771		79,063		79,021
07/31/83		98,881		98,844		96,331
07/31/84		106,746		105,442		104,703
07/31/85		128,775		130,480		129,741
07/31/86		155,776		156,163		157,625
07/31/87		162,649		162,434		164,746
07/31/88		176,667		174,776		177,215
07/31/89		200,841		200,501		204,164
07/31/90		214,609		210,832		218,597
07/31/91		237,739		231,705		241,994
07/31/92		282,164		270,025		277,755
07/31/93		315,292		300,822		305,993
07/31/94		310,743		297,037		306,282
07/31/95		335,522		326,853		337,244
07/31/96		356,493		343,628		355,926
07/31/97		395,089		383,070		394,231
07/31/98		421,544		411,045		425,252
07/31/99		428,913		414,065		435,839
07/31/00		450,928		432,980		461,838
07/31/01		508,076		486,326		520,453
07/31/02		522,431		511,463		559,661
07/31/03		578,001		542,538		589,979
07/31/04		614,794		569,562		618,527
07/31/05		645,989		600,016		648,161
07/31/06		658,520		604,820		657,616

¹ From 7/26/75, when Capital Research and Management Company became the investment adviser, through 7/31/06.

² The share value dipped below the $50,000 mark briefly in fiscal 1975 and 1976.

³ Lehman Brothers Aggregate Bond Index and Lipper A-Rated Bond Funds Index did not exist until 12/31/75. For the period from 7/31/75 to 12/31/75, the Lehman Brothers Government/Credit Bond Index was used.

All results calculated with dividends and capital gains reinvested.

Sales charges do not apply to the Growth and Income Portfolio or the Bond Portfolio.

The market indexes are unmanaged.

The results shown are before taxes on fund distributions and sale of fund shares.

Summary investment portfolio

The following summary investment portfolio is designed to streamline the report and help investors better focus on a fund’s principal holdings. For details on how to obtain a complete schedule of portfolio holdings, please see the inside back cover.

Growth and Income Portfolio, July 31, 2006

[begin pie chart]

Information technology			15.35%
Health care			12.94
Consumer staples			12.70
Financials			11.69
Short-term securities & other assets less liabilities			14.34
Energy			9.48
Consumer discretionary			9.40
Industrials			6.49
Materials			3.29
Telecommunication services			1.65
Convertible securities			0.77
Miscellaneous			1.90

[end pie chart]

						Percent
					Market		of net
Common stocks - 84.89%		Shares			value		assets

Information technology - 15.35%
Microsoft Corp.		146,000		$	3,508,380		3.38	%
Oracle Corp. (1)		160,000			2,395,200		2.30
Intel Corp.		125,000			2,250,000		2.17
Nokia Corp. (ADR)		78,000			1,548,300		1.49
Cisco Systems, Inc. (1)		77,000			1,374,450		1.32
Texas Instruments Inc.		28,000			833,840		.80
Other securities					4,040,050		3.89
					15,950,220		15.35

Health care - 12.94%
Medtronic, Inc.		48,000			2,424,960		2.33
Roche Holding AG		8,000			1,423,811		1.37
Eli Lilly and Co.		24,000			1,362,480		1.31
Merck & Co., Inc.		25,000			1,006,750		.97
Novo Nordisk A/S, Class B		15,000			924,436		.89
Medco Health Solutions, Inc. (1)		15,000			889,950		.86
Johnson & Johnson		14,000			875,700		.84
Abbott Laboratories		15,000			716,550		.69
Other securities					3,826,506		3.68
					13,451,143		12.94

Consumer staples - 12.70%
Altria Group, Inc.		35,000			2,798,950		2.69
Wal-Mart Stores, Inc.		53,000			2,358,500		2.27
PepsiCo, Inc.		32,000			2,028,160		1.95
Walgreen Co.		22,000			1,029,160		.99
L'Oréal SA		10,000			1,001,806		.96
Coca-Cola Co.		20,000			890,000		.86
WD-40 Co.		26,000			847,860		.82
Other securities					2,242,155		2.16
					13,196,591		12.70

Financials - 11.69%
Wells Fargo & Co.		30,000			2,170,200		2.09
Berkshire Hathaway Inc., Class A (1)		20			1,832,000		1.76
American International Group, Inc.		25,000			1,516,750		1.46
Bank of America Corp.		22,000			1,133,660		1.09
American Express Co.		21,000			1,093,260		1.05
U.S. Bancorp		28,000			896,000		.86
Wachovia Corp.		15,000			804,450		.77
SunTrust Banks, Inc.		10,000			788,700		.76
Other securities					1,918,203		1.85
					12,153,223		11.69

Energy - 9.48%
Exxon Mobil Corp.		50,000			3,387,000		3.26
Royal Dutch Shell PLC, Class A (ADR)		33,000			2,336,400		2.25
Chevron Corp.		35,000			2,302,300		2.21
ConocoPhillips		15,000			1,029,600		.99
Other securities					802,200		.77
					9,857,500		9.48

Consumer discretionary - 9.40%
Target Corp.		40,000			1,836,800		1.77
Lowe's Companies, Inc.		54,000			1,530,900		1.47
Walt Disney Co.		48,000			1,425,120		1.37
Time Warner Inc.		78,000			1,287,000		1.24
E.W. Scripps Co., Class A		18,000			769,140		.74
Other securities					2,917,612		2.81
					9,766,572		9.40

Industrials - 6.49%
Lockheed Martin Corp.		23,000			1,832,640		1.76
Caterpillar Inc.		20,000			1,417,400		1.36
Avery Dennison Corp.		15,000			879,450		.85
General Electric Co.		25,000			817,250		.79
Other securities					1,794,920		1.73
					6,741,660		6.49

Materials - 3.29%
Air Products and Chemicals, Inc.		13,000			831,090		.80
Other securities					2,591,190		2.49
					3,422,280		3.29

Telecommunication services - 1.65%
Other securities					1,716,246		1.65

Miscellaneous - 1.90%
Other common stocks in initial period of acquisition					1,973,520		1.90


Total common stocks (cost: $75,706,994)					88,228,955		84.89



		Principal					Percent
		amount			Market		of net
Convertible securities - 0.77%		(000	)		value		assets

Information technology - 0.77%
Lucent Technologies Inc. 8.00% convertible notes 2031	$	800			805,000		.77

Total convertible securities (cost: $819,630)					805,000		.77



		Principal					Percent
		amount			Market		of net
Short-term securities - 14.20%		(000	)		value		assets

Fannie Mae 5.07%-5.18% due 8/28-8/30/2006	$	3,000			2,987,494		2.87
Kimberly-Clark Worldwide Inc. 5.22% due 8/7/2006 (2)		1,400			1,398,577		1.35
Park Avenue Receivables Co., LLC 5.34% due 8/29/2006 (2)		1,200			1,194,836		1.15
Federal Home Loan Bank 5.02% due 8/4/2006		1,100			1,099,384		1.06
CAFCO, LLC 5.37% due 9/21/2006 (2)		1,100			1,091,846		1.05
Harley-Davidson Funding Corp. 5.10% due 8/3/2006 (2)		1,000			999,574		.96
Abbott Laboratories 5.21% due 8/8/2006 (2)		950			948,899		.91
E.I. duPont de Nemours and Co. 5.21% due 8/8/2006 (2)		900			898,957		.87
Hewlett-Packard Co. 5.29% due 8/23/2006 (2)		900			896,958		.86
Three Pillars Funding, LLC 5.29% due 8/1/2006 (2)		800			799,882		.77
Scripps (E.W.) Co. 5.30% due 9/19/2006 (2)		800			794,108		.76
Variable Funding Capital Corp. 5.28% due 8/11/2006 (2)		750			748,788		.72
Coca-Cola Co. 5.22% due 8/14/2006		500			498,983		.48
Ranger Funding Co. LLC 5.33% due 8/22/2006 (2)		401			399,693		.39

Total short-term securities (cost: $14,757,561)					14,757,979		14.20

Total investment securities (cost: $91,284,185)					103,791,934		99.86
Other assets less liabilities					141,986		.14

Net assets				$	103,933,920		100.00	%


"Miscellaneous" securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.
"Other securities" includes all issues that are not disclosed separately in the summary investment portfolio.

The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item.


(1) Security did not produce income during the last 12 months.
(2) Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to the public may require registration. The total value of all such restricted securities, including those in "Other securities" in the summary investment portfolio, was $10,172,118, which represented 9.79% of the net assets of the fund. Certain restricted securities may nonetheless trade actively among eligible investors.

ADR = American Depositary Receipts

See Notes to Financial Statements

Summary investment portfolio

Bond Portfolio, July 31, 2006

[begin pie chart]

Mortgage- and asset-backed obligations	23.33%
U.S. government & government agency bonds & notes	14.69
Municipals	1.61
Non-U.S. government bonds & notes	0.37
Preferred securities	8.33
Short-term securities & other assets less liabilities	5.24
Financials	21.98	>
Industrials	5.39	>
Telecommunication services	4.70	>
Consumer discretionary	4.56	>
Utilities	4.37	> Corporate bonds & notes	46.43%
Materials	1.65	>
Energy	1.35	>
Health care	1.19	>
Consumer staples	0.62	>
Information technology	0.62	>

[end pie chart]

	Principal			Market			Percent
		amount			value			of net
Bonds & notes - 86.43%		(000	)					assets

Corporate bonds & notes - 46.43%

Financials - 21.98%
Residential Capital Corp.:
6.607% 2009 (1)	$	300		$	301,068
6.375% 2010		250			249,370
General Motors Acceptance Corp.:
7.25% 2011		455			446,457
7.431%-7.75% 2010-2014 (1)		495			491,163			2.47	%
Washington Mutual, Inc.:
5.737% 2012 (1)		650			648,840
5.625% 2007		250			250,120
Washington Mutual Preferred Funding I Ltd. 6.534% (undated) (1) (2)		300			292,011			1.98
Ford Motor Credit Co.:
7.875% 2010		650			612,043
7.375% 2009		150			141,590			1.25
ILFC E-Capital Trust I 5.90% 2065 (1) (2)		355			351,580
American General Finance Corp., Series I, 5.40% 2015		250			241,422
AIG SunAmerica Global Financing VII 5.85% 2008 (2)		125			126,013			1.19
Hospitality Properties Trust:
6.30% 2016		400			400,652
6.75% 2013		215			222,681			1.04
Development Bank of Singapore Ltd. 7.875% 2009 (2)		250			264,835
DBS Bank Ltd. 5.98% 2021 (1) (2)		250			251,050			.86
TuranAlem Finance BV 8.50% 2015 (2)		400			405,000			.67
SocGen Real Estate Co. LLC, Series A, 7.64% (undated) (1) (2)		375			383,473			.64
Lincoln National Corp. 7.00% 2066 (1)		360			366,218			.61
JPM Capital Trust I, cumulative capital securities trust, 7.54% 2027		345			363,723			.60
Resona Bank, Ltd. 5.85% (undated) (1) (2)		375			357,297			.59
Lazard Group LLC 7.125% 2015		315			321,955			.54
Other securities					5,748,310			9.54
					13,236,871			21.98

Industrials - 5.39%
Continental Airlines, Inc.:
Series 2001-1, Class A-2, 6.503% 2011 (3)		385			387,472
6.648%-7.707% 2019-2022 (3)		348			358,862			1.24
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class G, MBIA insured, 6.664% 2013 (2) (3)		340			352,670			.58
American Airlines, Inc., Series 2001-2, Class A-1, 6.978% 2012 (3)		324			331,189			.55
Other securities					1,817,880			3.02
					3,248,073			5.39

Telecommunication services - 4.70%
AT&T Wireless Services, Inc.:
8.125% 2012		500			554,701
7.875% 2011		100			108,599			1.10
Nextel Communications, Inc.:
Series E, 6.875% 2013		500			506,072
Series D, 7.375% 2015		150			153,829			1.10
Other securities					1,505,072			2.50
					2,828,273			4.70

Consumer discretionary - 4.56%
DaimlerChrysler North America Holding Corp. 8.00% 2010		600			641,704			1.07
Other securities					2,101,868			3.49
					2,743,572			4.56

Utilities - 4.37%
Homer City Funding LLC 8.734% 2026 (3)		295			331,897			.55
Exelon Generation Co., LLC 6.95% 2011		300			314,652			.52
Other securities					1,988,144			3.30
					2,634,693			4.37

Materials - 1.65%
Norske Skogindustrier ASA 7.625% 2011 (2)		500			509,781			.85
Other securities					483,724			.80
					993,505			1.65

Energy - 1.35%
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 2014 (2) (3)		300			295,875			.49
Other securities					515,308			.86
					811,183			1.35

Health care - 1.19%
Other securities					714,526			1.19

Consumer staples - 0.62%
Other securities					374,772			.62

Information technology - 0.62%
Other securities					371,589			.62

Mortgage- and asset-backed obligations (3) - 23.33%
Fannie Mae:
5.50% 2036		454			440,791
6.00%-12.01% 2010-2041 (1)		1,288			1,320,454			2.92
Government National Mortgage Assn.:
6.00% 2036		875			873,731
8.50%-10.00% 2008-2020		55			61,901			1.55
Countrywide Alternative Loan Trust 5.143%-6.00% 2035-2036 (1)		822			809,786			1.34
Freddie Mac 0%-8.75% 2008-2036		806			735,171			1.22
ARG Funding Corp.:
Series 2005-2, Class A-1, AMBAC insured, 4.54% 2009 (2)		500			493,184
Series 2005-1, Class A-3, MBIA insured, 4.29% 2011 (2)		250			240,681			1.22
GMAC Mortgage Loan Trust, Series 2006-AR1, Class 2-A-1, 5.653% 2036 (1)		486			481,984			.80
Morgan Stanley Capital I, Inc., Series 1998-HF2, Class A-2, 6.48% 2030		423			429,186			.71
Chase Commercial Mortgage Securities Corp., Series 1998-2, Class A-2, 6.39% 2030		353			358,421			.60
Residential Funding Mortgage Securities I, Inc., Series 2004-SA1, Class A-II, 4.325% 2034 (1)		344			334,769			.56
Crown Castle Towers LLC, Series 2005-1, Class D, 5.612% 2035 (2)		325			320,589			.53
SBA CMBS Trust, Series 2005-1, Class D, 6.219% 2035 (2)		320			318,967			.53
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 2026 (2)		290			308,516			.51
Other securities					6,525,050			10.84
					14,053,181			23.33

U.S. government & government agency bonds & notes - 14.69%
U.S. Treasury:
3.625% 2009 (4)		1,125			1,085,535
14.00% 2011		450			461,461
4.25% 2013		1,600			1,535,504
12.50% 2014		1,200			1,454,628
11.25% 2015		800			1,145,752
4.50% 2036		2,475			2,260,368			13.19
Fannie Mae 5.25% 2007		500			498,975			.83
Freddie Mac 5.50% 2011		400			403,988			.67
					8,846,211			14.69

Municipals - 1.61%
State of California, Golden State Tobacco Securitization Corp., Tobacco Settlement Asset-backed Bonds, Series 2003-A-1, 6.25% 2033		325			355,417			.59
Other securities					612,546			1.02
					967,963			1.61

Non-U.S. government bonds & notes - 0.37%
Other securities					225,315			.37


Total bonds & notes (cost: $53,236,150)					52,049,727			86.43



								Percent
					Market			of net
Preferred securities - 8.33%		Shares			value			assets

Financials - 8.33%
BNP U.S. Funding LLC, Series A, 7.738% noncumulative preferred (1) (2)		375,000			384,356
BNP Paribas 5.186% noncumulative (1) (2)		300,000			277,775
BNP Paribas Capital Trust 9.003% noncumulative trust preferred (1) (2)		150,000			167,500			1.38
Fannie Mae, Series O, 7.625% preferred (1) (2)		15,000			810,000			1.35
HSBC Capital Funding LP, Series 1, 9.547% noncumulative step-up perpetual preferred (1) (2)		400,000			451,231			.75
Fuji JGB Investment LLC, Series A, 9.87% noncumulative preferred (1) (2)		360,000			386,465			.64
Deutsche Bank Capital Funding Trust I, 7.872% (1) (2)		300,000			315,640			.52
Resona Preferred Global Securities (Cayman) Ltd. 7.191% (2)		250,000			255,123			.42
DBS Capital Funding Corp., Series A, 7.657% noncumulative guaranteed preference shares (1) (2)		125,000			134,332			.23
Other securities					1,832,630			3.04

Total preferred securities (cost: $4,925,404)					5,015,052			8.33



		Principal			Market			Percent
		amount			value			of net
Short-term securities - 5.39%		(000	)					assets


Becton, Dickinson and Co. 5.22% due 8/7/2006	$	1,000			998,985			1.66
Caterpillar Inc. 5.24% due 8/1/2006 (2)		900			899,869			1.49
Hewlett-Packard Co. 5.25% due 8/9/2006 (2)		850			848,884			1.41
E.I. duPont de Nemours and Co. 5.23% due 8/4/2006 (2)		500			499,710			.83

Total short-term securities (cost: $3,247,448)					3,247,448			5.39


Total investment securities (cost: $61,409,002)					60,312,227			100.15
Other assets less liabilities					(92,339	)		(0.15	)


Net assets				$	60,219,888			100.00	%

"Other securities" includes all issues that are not disclosed separately in the summary investment portfolio.

The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item.

(1) Coupon rate may change periodically.
(2) Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to the public may require registration. The total value of all such restricted securities, including those in "Other securities" in the summary investment portfolio, was $16,408,589, which represented 27.25% of the net assets of the fund. Certain restricted securities may nonetheless trade actively among eligible investors.
(3) Pass-through securities backed by a pool of mortgages or other loans on which principal payments are periodically made. Therefore, the effective maturities are shorter than the stated maturities.
(4) This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future.


See Notes to Financial Statements

Financial statements

Statements of assets and liabilities
at July 31, 2006

		Growth and Income			Bond
		Portfolio			Portfolio

Assets:
Investment securities at market (cost: $91,284,185 and $61,409,002, respectively)	$	103,791,934		$	60,312,227
Cash		108,113			136,914
Receivables for:
Sales of investments		65,750			200
Sales of fund's shares		23,162			43,015
Dividends and interest		90,407			772,115
Total assets		104,079,366			61,264,471

Liabilities:
Payables for:
Purchases of investments		100,599			1,016,123
Investment advisory services		39,146			22,866
Other fees and expenses		5,701			5,594
Total liabilities		145,446			1,044,583
Net assets at July 31, 2006	$	103,933,920		$	60,219,888

Net assets consist of:
Capital paid in on shares of beneficial interest	$	87,453,649		$	62,391,077
Undistributed (distributions in excess of) net investment income		361,939			(371,282	)
Undistributed (accumulated) net realized gain (loss)		3,610,377			(703,254	)
Net unrealized appreciation (depreciation)		12,507,955			(1,096,653	)
Net assets at July 31, 2006	$	103,933,920		$	60,219,888

Shares of beneficial interest issued and outstanding - unlimited shares authorized
Shares outstanding		6,996,366			3,767,196
Net asset value per share	$	14.86		$	15.99

See Notes to Financial Statements


Statements of operations
for the year ended July 31, 2006

		Growth and Income Portfolio			Bond Portfolio
Investment income:
Income:
Dividends (net of non-U.S. taxes of $16,660 on Growth and Income Portfolio)	$	1,695,185		$	96,084
Interest		579,053			3,303,476
Total income		2,274,238			3,399,560

Fees and expenses:
Investment advisory services		510,774			296,578
Transfer agent services		488			424
Reports to shareholders		11,793			6,970
Registration statement and prospectus		26,397			23,557
Trustees' compensation		76,138			44,945
Trustees' travel expenses		24,883			14,582
Auditing		40,012			40,004
Legal		28,091			28,091
Custodian		1,357			1,086
Other		10,313			10,105
Total fees and expenses before waiver		730,246			466,342
Less waiver of fees and expenses:
Investment advisory services		51,077			29,658
Total fees and expenses after waiver		679,169			436,684
Net investment income		1,595,069			2,962,876

Net realized gain andunrealized depreciation on investments and non-U.S. currency:
Net realized gain (loss) on:
Investments		3,724,598			(47,111	)
Non-U.S. currency transactions		(46,825	)		203,318
		3,677,773			156,207
Net unrealized (depreciation) appreciation on:
Investments		(951,196	)		(2,028,748	)
Non-U.S. currency translations		864			1,314
		(950,332	)		(2,027,434	)
Net realized gain and
unrealized depreciation on investments and non-U.S. currency		2,727,441			(1,871,227	)
Net increase in net assets resulting from operations	$	4,322,510		$	1,091,649

See Notes to Financial Statements


GROWTH AND INCOME PORTFOLIO

Statements of changes in net assets

		Year ended			Year ended
		July 31,			July 31,
		2006			2005
Operations:
Net investment income	$	1,595,069		$	1,592,287
Net realized gain on investments and non-U.S. currency transactions		3,677,773			4,312,507
Net unrealized (depreciation) appreciation on investments and non-U.S. currency translations		(950,332	)		3,705,885
Net increase in net assets resulting from operations		4,322,510			9,610,679

Dividends and distributions paid to shareholders:
Dividends from net investment income		(1,573,538	)		(1,400,093	)
Distributions from net realized gain on investments		(3,411,060	)		(2,564,054	)
Total dividends and distributions paid to shareholders		(4,984,598	)		(3,964,147	)

Capital share transactions		(1,714,131	)		10,635,416

Total (decrease) increase in net assets		(2,376,219	)		16,281,948

Net assets:
Beginning of year		106,310,139			90,028,191
End of year (including undistributed
net investment income: $361,939 and $342,356, respectively)	$	103,933,920		$	106,310,139


BOND PORTFOLIO

Statements of changes in net assets

		Year ended			Year ended
		July 31,			July 31,
		2006			2005
Operations:
Net investment income	$	2,962,876		$	2,916,766
Net realized gain on investments and non-U.S. currency transactions		156,207			604,275
Net unrealized depreciation on investments and non-U.S. currency translations		(2,027,434	)		(468,296	)
Net increase in net assets resulting from operations		1,091,649			3,052,745

Dividends paid to shareholders from net investment income		(3,392,290	)		(3,464,879	)

Capital share transactions		(2,252,490	)		5,960,099

Total (decrease) increase in net assets		(4,553,131	)		5,547,965

Net assets:
Beginning of year		64,773,019			59,225,054
End of year (including distributions in excess of
net investment income: $(371,282) and $(363,031), respectively)	$	60,219,888		$	64,773,019

See Notes to Financial Statements

Notes to financial statements

1.	Organization and significant accounting policies

Organization - Endowments (the "trust") is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company and has initially issued two series of shares, Growth and Income Portfolio and Bond Portfolio (the "funds"). Growth and Income Portfolio seeks to provide long-term growth of principal, with income and preservation of capital as secondary objectives, primarily through investments in common stocks. Bond Portfolio seeks to provide as high a level of current income as is consistent with the preservation of capital through investments in fixed-income securities.

Significant accounting policies - The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the trust:

Security valuation - Equity securities are valued at the official closing price of, or the last reported sale price on, the exchange or market on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. Prices for each security are taken from the principal exchange or market in which the security trades. Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are valued at prices obtained from an independent pricing service when such prices are available. However, where the investment adviser deems it appropriate, such securities will be valued at the mean quoted bid and asked prices (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days or less remaining to maturity. The ability of the issuers of the debt securities held by the funds to meet their obligations may be affected by economic developments in a specific industry, state or region. Securities and other assets for which representative market quotations are not readily available or are considered unreliable are fair valued as determined in good faith under procedures adopted by authority of the trust's board of trustees. Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions.

Security transactions and related investment income - Security transactions are recorded by the funds as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. In the event a security is purchased with a delayed payment date, the fund will segregate liquid assets sufficient to meet its payment obligations. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security.

Dividends and distributions to shareholders - Dividends and distributions paid to shareholders are recorded on the ex-dividend date.

Non-U.S. currency translation - Assets and liabilities, including investment securities, denominated in non-U.S. currencies are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. In the accompanying financial statements, the effects of changes in non-U.S. exchange rates on investment securities are included with the net realized gain or loss and net unrealized appreciation or depreciation on investments. The realized gain or loss and unrealized appreciation or depreciation resulting from all other transactions denominated in non-U.S. currencies are disclosed separately.

Mortgage dollar rolls - Bond Portfolio may enter into mortgage dollar roll transactions in which the fund sells a mortgage-backed security to a counterparty and simultaneously enters into an agreement with the same counterparty to buy back a similar security on a specific future date at a predetermined price. Each mortgage dollar roll is treated as a financing transaction; therefore, any gain or loss is considered unrealized until the roll reaches completion. Risks may arise due to the delayed payment date and the potential inability of counterparties to complete the transaction. Income is generated as consideration for entering into these transactions and is included in interest income on the accompanying financial statements.

2.	Non-U.S. investments

Investment risk - The risks of investing in securities of non-U.S. issuers may include, but are not limited to, investment and repatriation restrictions; revaluation of currencies; adverse political, social and economic developments; government involvement in the private sector; limited and less reliable investor information; lack of liquidity; certain local tax law considerations; and limited regulation of the securities markets.

Taxation - Dividend and interest income is recorded net of non-U.S. taxes paid.

3. Federal income taxation and distributions

The funds comply with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intend to distribute substantially all of their net taxable income and net capital gains each year. The funds are not subject to income taxes to the extent such distributions are made. Therefore, no federal income tax provision is required.

Distributions - Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as short-term capital gains and losses; unrealized appreciation of certain investments in non-U.S. securities; net capital losses; and amortization of premiums. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the funds for financial reporting purposes.

During the year ended July 31, 2006, Growth and Income Portfolio reclassified $1,948 from undistributed net investment income to undistributed net realized gain and Bond Portfolio reclassified $421,163 from accumulated net realized loss to distributions in excess of net investment income to align financial reporting with tax reporting.

As of July 31, 2006, the components of distributable earnings, unrealized appreciation (depreciation) and cost of investments on a tax basis were as follows:

	Growth and Income Portfolio	Bond Portfolio
Undistributed ordinary income	$939,438		$450,671
Undistributed long-term capital gain	3,089,247		-
Capital loss carryforwards*:
Expiring 2011	-	$(197,714)
Expiring 2014	-	(345,751)	(543,465)
Post October capital loss deferrals (realized during the period November 1, 2005, through July 31, 2006)†	-		(145,536)
Gross unrealized appreciation on investment securities	15,570,574		39,098
Gross unrealized depreciation on investment securities	(3,119,195)		(1,961,028)
Net unrealized appreciation (depreciation) on investment securities	12,451,379		(1,921,930)
Cost of investment securities	91,340,555		62,234,157

*The capital loss carryforwards will be used to offset any capital gains realized by the fund in future years through the expiration dates. The fund will not make distributions from capital gains while capital loss carryforwards remain.
†These deferrals are considered incurred in the subsequent year.

For the year ended July 31, 2006, Growth and Income Portfolio made distributions from realized short-term capital gains in the amount of $514,877 and from realized long-term capital gains in the amount of $2,896,183.

4. Fees and transactions with related parties

Capital Research and Management Company ("CRMC"), the funds’ investment adviser, is the parent company of American Funds Service Company ^SM ("AFS"), the funds’ transfer agent.

Investment advisory services - The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. These fees are based on an annual rate of 0.50% on the first $150 million of each fund’s daily net assets and 0.40% on such assets in excess of $150 million.

The Investment Advisory and Service Agreement provides for a fee reduction to the extent that annual operating expenses exceed 0.75% of the average daily net assets of each fund. Expenses related to interest, taxes, brokerage commissions, transaction costs and extraordinary items are not subject to these limitations. For the year ended July 31, 2006, no such fee reductions were required, but CRMC is voluntarily waiving 10% of investment advisory services fees. During the year ended July 31, 2006, total investment advisory services fees waived by CRMC were $51,077 and $29,658 for Growth and Income Portfolio and Bond Portfolio, respectively. As a result, the fees shown on the accompanying financial statements of $510,774 and $296,578, for Growth and Income Portfolio and Bond Portfolio, respectively, were both reduced to an annualized rate of 0.450% of average daily net assets.

Transfer agent services - The funds have a transfer agent agreement with AFS. Under this agreement, the funds compensate AFS for transfer agent services including shareholder recordkeeping and communications.

Affiliated officers and trustees - Officers and certain trustees of the trust are or may be considered to be affiliated with CRMC and AFS. No affiliated officers or trustees received any compensation directly from the funds.

5. Capital share transactions

Capital share transactions in the funds were as follows:

	Sales			Reinvestments of dividends and distributions			Repurchases					Net (decrease) increase
		Amount	Shares		Amount	Shares		Amount		Shares			Amount		Shares
Year ended July 31, 2006
Growth and Income Portfolio	$	13,316,629	901,807	$	4,649,782	317,885	$	(19,680,542	)	(1,336,012	)	$	(1,714,131	)	(116,320	)
Bond Portfolio		6,094,902	377,010		2,805,680	174,045		(11,153,072	)	(680,419	)		(2,252,490	)	(129,364	)


Year ended July 31, 2005
Growth and Income Portfolio	$	12,669,940	869,849	$	3,499,712	240,757	$	(5,534,236	)	(383,646	)	$	10,635,416		726,960
Bond Portfolio		7,665,322	455,477		2,628,385	157,099		(4,333,608	)	(259,090	)		5,960,099		353,486

6. Investment transactions

Growth and Income Portfolio and Bond Portfolio made purchases of investment securities of $22,117,906 and $35,245,824 and sales of investment securities of $30,693,346 and $37,522,801, respectively, during the year ended July 31, 2006. Short-term securities were excluded.

Financial highlights

Growth and Income Portfolio

			Income (loss) from investment operations(1)									Dividends and distributions

		Net asset value, beginning of year		Net investment income		Net gains (losses) on securities (both realized and unrealized	)		Total from investment operations			Dividends (from net investment income	)		Distributions (from capital gains	)		Total dividends and distributions			Net asset value, end of year	Total return			Net assets, end of year(in millions	)	Ratio of expenses to average net assets before waivers		Ratio of expenses to average net assets after waivers		(2	)	Ratio of net income to average net assets

Year ended 7/31/2006	$	14.95	$	.23	$	.44		$	.67		$	(.23	)	$	(.53	)	$	(.76	)	$	14.86	4.61	%	$	104		.71	%	.66	%			1.56	%
Year ended 7/31/2005		14.10		.24		1.20			1.44			(.21	)		(.38	)		(.59	)		14.95	10.33			106		.69		.66				1.60
Year ended 7/31/2004		12.57		.20		1.53			1.73			(.20	)		-			(.20	)		14.10	13.81			90		.64		.64				1.43
Year ended 7/31/2003		11.61		.22		.94			1.16			(.20	)		-			(.20	)		12.57	10.18			76		.68		.68				1.88
Year ended 7/31/2002		13.11		.23		(1.33	)		(1.10	)		(.24	)		(.16	)		(.40	)		11.61	(8.60	)		63		.66		.66				1.81

Bond Portfolio

			Income from investment operations(1)							Dividends and distributions

		Net asset value, beginning of year		Net investment income		Net (losses) gains on securities (both realized and unrealized	)		Total from investment operations		Dividends (from net investment income	)		Distributions (from capital gains	)		Total dividends and distributions			Net asset value, end of year	Total return			Net assets, end of year(in millions	)	Ratio of expenses to average net assets before waivers		Ratio of expenses to average net assets after waivers		(2	)	Ratio of net income to average net assets

Year ended 7/31/2006	$	16.62	$	.81	$	(.50	)	$	.31	$	(.94	)	$	-		$	(.94	)	$	15.99	1.94	%	$	60		.79	%	.74	%			5.00	%
Year ended 7/31/2005		16.72		.78		.05			.83		(.93	)		-			(.93	)		16.62	5.07			65		.74		.71				4.61
Year ended 7/31/2004		16.57		.83		.22			1.05		(.90	)		-			(.90	)		16.72	6.37			59		.70		.70				4.93
Year ended 7/31/2003		15.93		.89		.77			1.66		(1.02	)		-			(1.02	)		16.57	10.64			59		.71		.71				5.38
Year ended 7/31/2002		16.56		.99		(.53	)		.46		(1.09	)		-			(1.09	)		15.93	2.82			50		.70		.70				6.07

	Year ended July 31
Portfolio turnover rate	2006		2005		2004		2003		2002
Growth and Income Portfolio	25	%	31	%	32	%	29	%	50	%
Bond Portfolio	62	%	51	%	36	%	25	%	70	%

(1) Based on average shares outstanding.
(2) The ratios in this column reflect the impact, if any, of certain waivers from CRMC. During some of the periods shown, CRMC reduced fees for investment advisory services.

See Notes to Financial Statements

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Trustees of Endowments:

We have audited the accompanying statements of assets and liabilities of Endowments (the “trust”), comprising the Growth and Income and Bond Portfolios, including the summary investment portfolios, as of July 31, 2006, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the trust’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the trust’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2006, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the portfolios constituting Endowments as of July 31, 2006, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Costa Mesa, California

September 14, 2006

Tax information unaudited

We are required to advise you within 60 days of the funds’ fiscal year-end regarding the federal tax status of certain distributions received by shareholders during such fiscal year. The funds hereby designate the following amounts for the funds’ fiscal year ended July 31, 2006:

		Growth and Income Portfolio		Bond Portfolio

Long-term capital gains	$	2,896,000	$
Qualified dividend income		1,880,000		80,000
U.S. government income that may be exempt from state taxation		48,000		413,000

Additional tax information will be mailed in early 2007 to applicable shareholders. Shareholders should consult their tax advisers.

Expense example unaudited

As a shareholder of the funds, you incur certain ongoing costs, including management fees and other expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the funds so you can compare these costs with the ongoing costs of investing in other mutual funds. The examples below are based on an investment of $1,000 invested at the beginning of the period and held for the entire period (February 1, 2006, through July 31, 2006).

Actual expenses:

The first line for each fund in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses paid during period" to estimate the expenses you paid on your account during this period. Shareholders may be subject to fees charged by financial intermediaries. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would also be lower by the amount of these fees.

Hypothetical example for comparison purposes:

The second line for each fund in the table below provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of the fund. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Shareholders may be subject to fees charged by financial intermediaries. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would also be lower by the amount of these fees.

	Beginning Account Value 2/1/2006		Ending Account Value 7/31/2006		Expenses Paid During Period(*)		Annualized Expense Ratio

Growth and Income Portfolio -- actual return	$	1,000.00	$	1,014.37	$	3.20		.64	%
Growth and Income Portfolio -- assumed 5% return		1,000.00		1,021.62		3.21		.64
Bond Portfolio -- actual return		1,000.00		1,010.78		3.59		.72
Bond Portfolio -- assumed 5% return		1,000.00		1,021.22		3.61		.72

(*) Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the period (181), and divided by 365 (to reflect the one-half year period).

Approval of Investment Advisory and Service Agreements

The board of trustees of the Endowments Trust (the “trust”) has approved the Investment Advisory and Service Agreements (the “agreements”) with respect to the trust’s Growth and Income Portfolio and Bond Portfolio (each a “fund”) with Capital Research and Management Company (“CRMC”) for an additional one-year term through July 27, 2007. The board approved the agreements following the recommendation of the trust’s Contracts Committee (the “committee”), which is composed of all of the trust’s independent trustees. The information, material factors and conclusions that formed the basis for the committee’s recommendation and the board’s subsequent approval are described below.

1. Information reviewed

Materials reviewed — During the course of each year, the trustees review a wide variety of materials relating to the services provided by CRMC, including reports on each of the fund’s investment results, portfolio composition, portfolio trading practices, shareholder services and other information relating to the nature, extent and quality of services provided by CRMC to the funds. In addition, the committee requests and reviews supplementary information that includes extensive materials regarding each fund’s investment results, advisory fee and expense comparisons, financial and profitability information regarding CRMC, descriptions of various functions such as compliance monitoring and information about the personnel providing investment management and administrative services to the funds.

Review process — The committee received assistance and advice regarding legal and industry standards from independent counsel to the independent trustees. The committee discussed the approval of the agreements with CRMC representatives and in a private session with independent counsel at which no representatives of CRMC were present. In deciding to recommend the approval of the agreements, the committee did not identify any single issue or particular piece of information that, in isolation, was the controlling factor. This summary describes the most important, but not all, of the factors considered by the board and the committee.

2. Nature, extent and quality of services

CRMC, its personnel and its resources — The board and the committee considered the depth and quality of CRMC’s investment management process, including its global research capabilities; the experience, capability and integrity of its senior management and other personnel; the low turnover rates of its key personnel; the overall financial strength and stability of its organization; and the ability of its organizational structure to address the recent growth in assets under management. The board and the committee also considered that CRMC made available to its investment professionals a variety of resources and systems relating to investment management, compliance, trading, investment results and portfolio accounting. They considered CRMC’s commitment to investing in information technology supporting investment management and compliance. They further considered CRMC’s continuing need to attract and retain qualified personnel and to maintain and enhance its resources and systems.

Other services — The board and the committee considered CRMC’s policies, procedures and systems designed to comply with applicable laws and regulations and its commitment to compliance; its efforts to keep the trustees informed; and its attention to matters that may involve potential conflicts of interest with the funds. The board and the committee also considered the nature, extent, quality and cost of administrative, distribution and shareholder services provided by CRMC to the funds under the agreements and other agreements, including the information technology, legal, and fund accounting and treasury functions.

3. Investment results

The board and the committee considered the investment results of each fund in light of its objective. They also considered information regarding indexes and funds comparable to each fund that were used to evaluate relative investment results.

Growth and Income Portfolio seeks to provide long-term growth of principal, with income and preservation of capital as secondary objectives, primarily through investments in common stocks. The board and the committee reviewed the fund’s absolute investment results measured against (i) the Lipper Growth & Income Funds Index (the Lipper category that includes the fund), (ii) a group of other growth and income funds with asset levels comparable to the fund and (iii) the Standard & Poor’s 500 Composite Index. The board and the committee examined investment results for the five- and 10-year periods ending March 31, 2006, and the one-year period ending December 31, 2005, and noted that the fund’s investment results exceeded both indexes and the median of comparable growth and income funds over each of the five- and 10-year periods, though were lower than both indexes and the median of comparable growth and income for the one-year period.

Bond Portfolio seeks to provide as high a level of current income as is consistent with the preservation of capital through investments in fixed-income securities. The board and the committee reviewed the fund’s absolute investment results measured against (i) the Lipper A-Rated Bond Funds Index (the Lipper category that includes the fund), (ii) the Lehman Brothers Aggregate Bond Index, (iii) the Vanguard Total Bond Market Index Fund (an index fund) and (iv) the Citigroup Broad Investment-Grade Index. The board and the committee examined investment results for the five- and 10-year periods ending March 31, 2006, and the one-year period ending December 31, 2005, and noted that the fund’s investment results exceeded the above indexes over the five- and 10-year periods, and slightly lagged in the one-year period. The board and the committee further noted that the fund’s 12-month yield exceeded that of all other funds in the Lipper A-Rated Bond Funds Index.

4. Advisory fees and total expenses

The board and the committee compared the advisory fees and total expenses of the funds (each as a percentage of average net assets) with the median fee and expense levels of all other funds in the applicable Lipper indexes and comparison funds as of July 31, 2005.

The board and the committee observed that the funds’ advisory fees and total expenses (each as a percentage of average net assets) were below the median in their respective Lipper categories. The board and the committee considered the extent to which advisory fees are reduced through breakpoint discounts in the funds’ advisory fee structure and also noted the 5% advisory fee waiver that CRMC put into effect September 1, 2004, which was increased to 10% on April 1, 2005.

The board and the committee also reviewed information and materials regarding the advisory fees paid by institutional clients of an affiliate of CRMC with similar investment mandates. They noted that, although the fees paid by those clients generally were lower than those paid by the American Funds, these differences reflected the significant investment, operational and regulatory differences between advising mutual funds and institutional clients.

5. Adviser financial information

The board and the committee reviewed information regarding CRMC’s costs of providing services to the American Funds, as well as the resulting level of profits to CRMC, comparing those to the reported results of several large, publicly held investment management companies. The board and the committee noted that its members had also received information during the past year regarding the structure and manner in which CRMC’s investment professionals were compensated and CRMC’s view of the relationship of such compensation to the attraction and retention of quality personnel. The board and the committee considered CRMC’s willingness to invest in technology, infrastructure and staff to reinforce and offer new services and to accommodate changing regulatory requirements.

6. Ancillary benefits

The board and the committee considered a variety of other benefits received by CRMC and its affiliates as a result of CRMC’s relationship with each fund and the other American Funds, including fees paid to CRMC’s affiliated transfer agent. The board and the committee reviewed CRMC’s portfolio trading practices, noting that, while CRMC may receive the benefit of research provided by broker-dealers executing portfolio transactions on behalf of the funds, it does not obtain third-party research or other services in return for allocating brokerage to such broker-dealers.

7. Conclusions

Based on their review, including their consideration of each of the factors referred to above, the board and the committee concluded, with respect to each fund, that the agreements are fair and reasonable to the funds and their shareholders, and that the funds’ shareholders received reasonable value in return for the advisory fees and other amounts paid to CRMC by the funds. The board and the committee concluded that the nature, extent and quality of services provided by CRMC, including its investment record, the funds’ cost structure and low level of fees, benefit and are in the best interests of the funds and their shareholders. The board and the committee concluded that each of the factors discussed above supported such approval.

Board of trustees

“Non-interested” trustees

	Year first
	elected
Name, age and	a trustee
telephone number	of the trust¹	Principal occupation(s) during past five years

Ronald P. Badie, 63	2006	Retired; former Vice Chairman of the Board,
818/790-1133		Deutsche Bank Alex. Brown

Robert J. Denison, 65	2003	Chair, First Security Management (private
505/988-5415		investments)

John E. Kobara, 51	2006	President and CEO, Big Brothers, Big Sisters of
213/481-3611		Greater Los Angeles and Inland Empire; Senior Vice President, Sylvan Learning Systems; President and CEO, OnlineLearning.net

Steven D. Lavine, Ph.D., 59	1994	President, California Institute of the Arts
661/255-1050

Patricia A. McBride, 63	1988	Chief Financial Officer, Cosmetic and Maxillofacial
Chairman of the Board		Surgery Center, Medical City Dallas Hospital
(Independent and Non-Executive)
214/368-0268

Gail L. Neale, 71	1998	President, The Lovejoy Consulting Group, Inc.
802/658-5673		(a pro bono consulting group advising nonprofit organizations)

Robert C. Ziebarth, 70	1993	Management consultant, Ziebarth Company
208/725-0535		(management and financial consulting)


“Non-interested” trustees

	Number of
	portfolios
	in fund
	complex²
Name, age and	overseen by
telephone number	trustee	Other directorships³ held by trustee

Ronald P. Badie, 63	2	Amphenol Corp.; Merisel Inc.; Nautilus Inc.
818/790-1133

Robert J. Denison, 65	6	None
505/988-5415

John E. Kobara, 51	2	None
213/481-3611

Steven D. Lavine, Ph.D., 59	2	None
661/255-1050

Patricia A. McBride, 63	2	None
Chairman of the Board
(Independent and Non-Executive)
214/368-0268

Gail L. Neale, 71	6	None
802/658-5673

Robert C. Ziebarth, 70	2	None
208/725-0535

Joseph M. Lumarda resigned from the trust in May 2006. The trustees thank Mr. Lumarda for his service and dedication to the trust. Ronald P. Badie and John E. Kobara were nominated by the trustees and elected by shareholders on September 12, 2006. We welcome them to the board.


“Interested” trustees⁴

	Year first
	elected a
Name, age,	trustee or	Principal occupation(s) during past five years
position with trust	officer of	and positions held with affiliated entities or
and telephone number	the trust¹	the principal underwriter of the trust

Robert G. O’Donnell, 62	1995	Senior Vice President and Director, Capital
Vice Chairman of the Board		Research and Management Company
415/393-7120

Thomas E. Terry, 68	1969	Private investor; Consultant; former Vice President
608/256-9910		and Secretary, Capital Research and Management Company (retired 1994)


“Interested” trustees⁴

	Number of
	portfolios
	in fund
Name, age,	complex²
position with trust	overseen by
and telephone number	trustee	Other directorships³ held by trustee

Robert G. O’Donnell, 62	3	None
Vice Chairman of the Board
415/393-7120

Thomas E. Terry, 68	2	None
608/256-9910

Trustee emeritus

Robert B. Egelston, 75		Former Chairman of the Board, The Capital Group Companies, Inc.⁵

The statement of additional information includes additional information about trustees and is available without charge upon request by calling American Funds Service Company at 800/421-0180. The address for all trustees and officers of the trust is 333 South Hope Street, Los Angeles, CA 90071, Attention: Fund Secretary.

Please see page 24 for footnotes.

Other officers⁶

	Year first	Principal occupation(s) during past
	elected	five years and positions held with
Name, age and	an officer	affiliated entities or the principal
position with trust	of the trust¹	underwriter of the trust

John H. Smet,* 50	1996	Senior Vice President, Capital Research
President		and Management Company; Director,
		American Funds Distributors, Inc.⁵

Abner D. Goldstine, 76	1995	Senior Vice President and Director,
Senior Vice President		Capital Researchand Management Company

Gregory D. Johnson, 43	2000	Senior Vice President, Capital Research
Vice President		Company⁵

Krista M. Johnson, 41	2000	Assistant Vice President — Fund
Vice President		Business Management Group, Capital Research and Management Company

Patrick F. Quan, 48	1986	Vice President — Fund Business
Vice President and Secretary		Management Group, Capital Research and Management Company

Susi M. Silverman, 36	1998	Vice President — Fund Business
Treasurer		Management Group, Capital Research and Management Company

Ari M. Vinocor, 31	2005	Vice President — Fund Business
Assistant Treasurer		Management Group, Capital Research and Management Company

*On September 14, 2006, John H. Smet was elected president of the trust, succeeding Claudia P. Huntington. The trustees thank Ms. Huntington for her many contributions to the trust.

¹ Trustees and officers of the trust serve until their resignation, removal or retirement.

² Capital Research and Management Company manages the American Funds, consisting of 29 funds. Capital Research and Management Company also manages American Funds Insurance Series,^® which serves as the underlying investment vehicle for certain variable insurance contracts, and Endowments, whose shareholders are limited to certain nonprofit organizations.

³ This includes all directorships (other than those in the American Funds) that are held by each trustee as a director of a public company or a registered investment company.

⁴ “Interested persons” within the meaning of the 1940 Act, on the basis of their affiliation with the funds’ investment adviser, Capital Research and Management Company, or affiliated entities.

⁵ Company affiliated with Capital Research and Management Company.

⁶ All of the officers listed, except Krista M. Johnson, are officers and/or directors/trustees of one or more of the other funds for which Capital Research and Management Company serves as investment adviser.

Office of the trust

One Market

Steuart Tower, Suite 1800

Mailing Address: P.O. Box 7650

San Francisco, CA 94120-7650

Investment adviser

Capital Research and Management Company

333 South Hope Street

Los Angeles, CA 90071-1406

Transfer agent for shareholder accounts

American Funds Service Company

Institutional Investment Services/HOST

P.O. Box 25065

Santa Ana, CA 92799-5965

Custodian of assets

JPMorgan Chase Bank

270 Park Avenue

New York, NY 10017-2070

Independent registered public accounting firm

Deloitte & Touche LLP

695 Town Center Drive

Suite 1200

Costa Mesa, CA 92626-7188

Counsel

Paul, Hastings, Janofsky & Walker LLP

515 South Flower Street

Los Angeles, CA 90071-2228

For more information about any of the American Funds, please ask your investment professional for a prospectus.

“American Funds Proxy Voting Guidelines” — which describes how we vote proxies relating to portfolio securities — is available free of charge on the U.S. Securities and Exchange Commission (SEC) website at sec.gov, on the American Funds website at americanfunds.com or upon request by calling American Funds Service Company (AFS) at 800/421-0180. The fund files its proxy voting record with the SEC for the 12 months ended June 30 by August 31. The report also is available on the Endowments website at americanfunds.com/endowments and on the SEC website.

A complete July 31, 2006, portfolio of Endowments’ investments is available free of charge by calling AFS or visiting the SEC website (where it is part of Form N-CSR).

Endowments files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. This filing is available free of charge on the SEC website. You may also review or, for a fee, copy this filing at the SEC’s Public Reference Room in Washington, D.C. (800/SEC-0330). Additionally, the list of portfolio holdings also is available by calling AFS.

This report is for the information of shareholders of Endowments, but it may also be used as sales literature when preceded or accompanied by the current prospectus, which gives details about charges, expenses, investment objectives and operating policies of the funds.

[logo - Capital Research and Management^SM]

The Capital Group Companies

Capital International Capital Guardian Capital Research and Management Capital Bank and Trust American Funds

Lit. No. MFGEAR-985-0906P

Litho in USA REG/PL/6375-S7233

Printed on recycled paper

ITEM 2 - Code of Ethics

The Registrant has adopted a Code of Ethics that applies to its Principal Executive Officer and Principal Financial Officer. The Registrant undertakes to provide to any person without charge, upon request, a copy of the Code of Ethics. Such request can be made to American Funds Service Company at 800/421-0180 or to the Secretary of the Registrant, One Market, Steuart Tower, San Francisco, California 94120.

ITEM 3 - Audit Committee Financial Expert

The Registrant’s Board has determined that Robert C. Ziebarth, a member of the Registrant’s Audit Committee, is an “audit committee financial expert” and "independent," as such terms are defined in this Item. This designation will not increase the designee’s duties, obligations or liability as compared to his or her duties, obligations and liability as a member of the Audit Committee and of the Board, nor will it reduce the responsibility of the other Audit Committee members. There may be other individuals who, through education or experience, would qualify as "audit committee financial experts" if the Board had designated them as such. Most importantly, the Board believes each member of the Audit Committee contributes significantly to the effective oversight of the Registrant’s financial statements and condition.

ITEM 4 - Principal Accountant Fees and Services

Registrant:
	a) Audit Fees:
		2005	$67,000
		2006	$71,000
	b) Audit-Related Fees:
		2005	$5,000
		2006	$51
		The audit-related fees consist of assurance and related services relating to the examination of the Registrant’s investment adviser conducted in accordance with Statement on Auditing Standards Number 70 issued by the American Institute of Certified Public Accountants.
	c) Tax Fees:
		2005	$9,000
		2006	$9,000
		The tax fees consist of professional services relating to the preparation of the Registrant’s tax returns.
	d) All Other Fees:
		2005	None
		2006	None

Adviser and affiliates (includes only fees for non-audit services billed to the adviser and affiliates for engagements that relate directly to the operations and financial reporting of the Registrant and were subject to the pre-approval policies described below):
	a) Not Applicable
	b) Audit-Related Fees:
		2005	$349,000
		2006	$374,000
		The audit-related fees consist of assurance and related services relating to the examination of the Registrant’s transfer agent, principal underwriter and investment adviser conducted in accordance with Statement on Auditing Standards Number 70 issued by the American Institute of Certified Public Accountants.
	c) Tax Fees:
		2005	None
		2006	None
	d) All Other Fees:
		2005	$15,000
		2006	$21,000
		The other fees consist of consulting services related to the Registrant’s compliance program.

The Registrant’s Audit Committee will pre-approve all audit and permissible non-audit services that the Committee considers compatible with maintaining the auditors’ independence. The pre-approval requirement will extend to all non-audit services provided to the Registrant, the investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant, if the engagement relates directly to the operations and financial reporting of the Registrant. The Committee will not delegate its responsibility to pre-approve these services to the investment adviser. The Committee may delegate to one or more Committee members the authority to review and pre-approve audit and permissible non-audit services. Actions taken under any such delegation will be reported to the full Committee at its next meeting. The pre-approval requirement is waived with respect to non-audit services if certain conditions are met. The pre-approval requirement was not waived for any of the non-audit services listed above provided to the Registrant, adviser, and affiliates.

Aggregate non-audit fees paid to the Registrant’s auditors, including fees for all services billed to the Registrant and the adviser and affiliates that provide ongoing services to the Registrant were $1,113,000 for fiscal year 2005 and $811,000 for fiscal year 2006. The non-audit services represented by these amounts were brought to the attention of the Committee and considered to be compatible with maintaining the auditors’ independence.

ITEM 5 - Audit Committee of Listed Registrants

Not applicable to this Registrant, insofar as the Registrant is not a listed issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934.

ITEM 6 - Schedule of Investments

[logo - Capital Research and Management ^SM]

Endowments, Growth and Income Portfolio^SM

Investment portfolio

July 31, 2006

Common stocks — 84.89%	Shares		Market value

INFORMATION TECHNOLOGY — 15.35%
Microsoft Corp.		146,000	$	3,508,380
Oracle Corp.¹		160,000		2,395,200
Intel Corp.		125,000		2,250,000
Nokia Corp. (ADR)		78,000		1,548,300
Cisco Systems, Inc.¹		77,000		1,374,450
Texas Instruments Inc.		28,000		833,840
International Business Machines Corp.		10,000		774,100
QUALCOMM Inc.		20,000		705,200
Analog Devices, Inc.		20,000		646,600
Dell Inc.¹		24,000		520,320
Google Inc., Class A¹		1,300		502,580
Linear Technology Corp.		15,000		485,250
EMC Corp.¹		40,000		406,000
				15,950,220


HEALTH CARE — 12.94%
Medtronic, Inc.		48,000		2,424,960
Roche Holding AG		8,000		1,423,811
Eli Lilly and Co.		24,000		1,362,480
Merck & Co., Inc.		25,000		1,006,750
Novo Nordisk A/S, Class B		15,000		924,436
Medco Health Solutions, Inc.¹		15,000		889,950
Johnson & Johnson		14,000		875,700
Becton, Dickinson and Co.		11,000		725,120
Bristol-Myers Squibb Co.		30,000		719,100
Abbott Laboratories		15,000		716,550
Biogen Idec Inc.¹		16,000		673,920
Pfizer Inc		25,000		649,750
Sanofi-Aventis		6,000		570,436
Amgen Inc.¹		7,000		488,180
				13,451,143


CONSUMER STAPLES — 12.70%
Altria Group, Inc.		35,000		2,798,950
Wal-Mart Stores, Inc.		53,000		2,358,500
PepsiCo, Inc.		32,000		2,028,160
Walgreen Co.		22,000		1,029,160
L’Oréal SA		10,000		1,001,806
Coca-Cola Co.		20,000		890,000
WD-40 Co.		26,000		847,860
Avon Products, Inc.		26,500		768,235
Bunge Ltd.		14,000		764,120
Sara Lee Corp.		42,000		709,800
				13,196,591


FINANCIALS — 11.69%
Wells Fargo & Co.		30,000	$	2,170,200
Berkshire Hathaway Inc., Class A¹		20		1,832,000
American International Group, Inc.		25,000		1,516,750
Bank of America Corp.		22,000		1,133,660
American Express Co.		21,000		1,093,260
U.S. Bancorp		28,000		896,000
Wachovia Corp.		15,000		804,450
SunTrust Banks, Inc.		10,000		788,700
Lincoln National Corp.		13,472		763,593
Fulton Financial Corp.		42,000		695,100
Marsh & McLennan Companies, Inc.		17,000		459,510
				12,153,223


ENERGY — 9.48%
Exxon Mobil Corp.		50,000		3,387,000
Royal Dutch Shell PLC, Class A (ADR)		33,000		2,336,400
Chevron Corp.		35,000		2,302,300
ConocoPhillips		15,000		1,029,600
Schlumberger Ltd.		12,000		802,200
				9,857,500


CONSUMER DISCRETIONARY — 9.40%
Target Corp.		40,000		1,836,800
Lowe’s Companies, Inc.		54,000		1,530,900
Walt Disney Co.		48,000		1,425,120
Time Warner Inc.		78,000		1,287,000
E.W. Scripps Co., Class A		18,000		769,140
Home Depot, Inc.		22,000		763,620
Vivendi SA		22,000		744,772
Gannett Co., Inc.		11,000		573,320
TJX Companies, Inc.		20,000		487,400
Viacom Inc., Class B¹		10,000		348,500
				9,766,572


INDUSTRIALS — 6.49%
Lockheed Martin Corp.		23,000		1,832,640
Caterpillar Inc.		20,000		1,417,400
Avery Dennison Corp.		15,000		879,450
General Electric Co.		25,000		817,250
Northrop Grumman Corp.		10,000		661,900
Illinois Tool Works Inc.		14,000		640,220
3M Co.		7,000		492,800
				6,741,660


MATERIALS — 3.29%
Air Products and Chemicals, Inc.		13,000		831,090
AptarGroup, Inc.		15,000		772,500
Dow Chemical Co.		20,000		691,600
International Paper Co.		18,000		617,940
Alcoa Inc.		17,000		509,150
				3,422,280


TELECOMMUNICATION SERVICES — 1.65%
Sprint Nextel Corp., Series 1		36,000		712,800
Verizon Communications Inc.		20,000		676,400
Vodafone Group PLC		131,250		285,016
Vodafone Group PLC, Class B^1,2		150,000		42,030
				1,716,246


MISCELLANEOUS — 1.90%
Other common stocks in initial period of acquisition				1,973,520


Total common stocks (cost: $75,706,994)				88,228,955



Convertible securities — 0.77%		Principal amount (000)

INFORMATION TECHNOLOGY — 0.77%
Lucent Technologies Inc. 8.00% convertible notes 2031	$	800		805,000


Total convertible securities (cost: $819,630)				805,000


Short-term securities — 14.20%

Fannie Mae 5.07%-5.18% due 8/28-8/30/2006		3,000		2,987,494
Kimberly-Clark Worldwide Inc. 5.22% due 8/7/2006³		1,400		1,398,577
Park Avenue Receivables Co., LLC 5.34% due 8/29/2006³		1,200		1,194,836
Federal Home Loan Bank 5.02% due 8/4/2006		1,100		1,099,384
CAFCO, LLC 5.37% due 9/21/2006³		1,100		1,091,846
Harley-Davidson Funding Corp. 5.10% due 8/3/2006³		1,000		999,574
Abbott Laboratories 5.21% due 8/8/2006³		950		948,899
E.I. duPont de Nemours and Co. 5.21% due 8/8/2006³		900		898,957
Hewlett-Packard Co. 5.29% due 8/23/2006³		900		896,958
Three Pillars Funding, LLC 5.29% due 8/1/2006³		800		799,882
Scripps (E.W.) Co. 5.30% due 9/19/2006³		800		794,108
Variable Funding Capital Corp. 5.28% due 8/11/2006³		750		748,788
Coca-Cola Co. 5.22% due 8/14/2006		500		498,983
Ranger Funding Co. LLC 5.33% due 8/22/2006³		401		399,693

Total short-term securities (cost: $14,757,561)				14,757,979

Total investment securities (cost: $91,284,185)				103,791,934
Other assets less liabilities				141,986

Net assets			$	103,933,920

“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

¹ Security did not produce income during the last 12 months.

² Valued under fair value procedures adopted by authority of the board of trustees.

³ Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to the public may require registration. The total value of all such restricted securities was $10,172,118, which represented 9.79% of the net assets of the fund. Certain restricted securities may nonetheless trade actively among eligible investors.

ADR = American Depositary Receipts

Endowments, Bond Portfolio^SM

Investment portfolio

July 31, 2006

Bonds & notes — 86.43%	Principal amount (000)			Market value

CORPORATE BONDS & NOTES — 46.43%
Financials — 21.98%
Residential Capital Corp. 6.607% 2009¹	$	300		$	301,068
Residential Capital Corp. 6.375% 2010		250			249,370
General Motors Acceptance Corp. 7.75% 2010		245			244,956
General Motors Acceptance Corp. 7.25% 2011		455			446,457
General Motors Acceptance Corp. 7.431% 2014¹		250			246,207
Washington Mutual, Inc. 5.625% 2007		250			250,120
Washington Mutual, Inc. 5.737% 2012¹		650			648,840
Washington Mutual Preferred Funding I Ltd. 6.534% (undated)^1,2		300			292,011
Ford Motor Credit Co. 7.375% 2009		150			141,590
Ford Motor Credit Co. 7.875% 2010		650			612,043
AIG SunAmerica Global Financing VII 5.85% 2008²		125			126,013
American General Finance Corp., Series I, 5.40% 2015		250			241,422
ILFC E-Capital Trust I 5.90% 2065^1,2		355			351,580
Hospitality Properties Trust 6.75% 2013		215			222,681
Hospitality Properties Trust 6.30% 2016		400			400,652
J.P. Morgan Chase & Co. 5.75% 2013		125			125,235
JPM Capital Trust I, cumulative capital securities trust, 7.54% 2027		345			363,723
EOP Operating LP 4.65% 2010		200			191,420
EOP Operating LP 8.10% 2010		125			135,372
EOP Operating LP 6.75% 2012		125			130,279
Abbey National PLC 6.70% (undated)¹		250			254,274
Abbey National PLC 7.35% (undated)¹		200			200,911
Santander Issuances, SA Unipersonal 5.805% 2016^1,2		100			100,257
PRICOA Global Funding I 4.20% 2010²		250			239,415
Prudential Holdings, LLC, Series C, 8.695% 2023^2,3		150			180,542
TuranAlem Finance BV 8.50% 2015²		400			405,000
SocGen Real Estate Co. LLC, Series A, 7.64% (undated)^1,2		375			383,473
Lincoln National Corp. 7.00% 2066¹		360			366,218
Resona Bank, Ltd. 5.85% (undated)^1,2		375			357,297
Lazard Group LLC 7.125% 2015		315			321,955
USA Education, Inc. 5.625% 2007		125			124,986
SLM Corp., Series A, 4.50% 2010		200			192,428
Banco Santander-Chile 5.375% 2014²		300			288,771
HBOS PLC, Series B, 5.92% (undated)^1,2		300			281,973
Development Bank of Singapore Ltd. 7.875% 2009²		250			264,835
DBS Bank Ltd. 5.98% 2021^1,2		250			251,050
Developers Diversified Realty Corp. 5.375% 2012		250			243,315
Berkshire Hathaway Finance Corp. 4.125% 2010		250			239,752
United Overseas Bank Ltd. 5.375% 2019^1,2		250			239,491
MBNA Global Capital Funding, Series B, 5.949% 2027¹		200			198,175
Kimco Realty Corp., Series C, 4.82% 2014		200			185,401
Downey Financial Corp. 6.50% 2014		150			149,057
Mizuho Capital Investment (USD) 1 Ltd. and Mizuho Capital Investment (EUR) 1 Ltd. 6.686%
noncumulative preferred (undated)^1,2		150			147,353
Sumitomo Mitsui Banking Corp. 5.625% (undated)^1,2		150			142,569
Nationwide Mutual Insurance Co. 7.875% 2033²		125			140,999
First Industrial, LP 6.875% 2012		125			129,953
BCI U.S. Funding Trust I 8.01% noncumulative preferred (undated)^1,2		125			129,921
United Dominion Realty Trust, Inc. 6.50% 2009		125			129,173
Household Finance Corp. 6.375% 2011		125			129,065
Rouse Co. 7.20% 2012		125			126,290
ReliaStar Financial Corp. 8.00% 2006		125			125,704
Allstate Financial Global Funding LLC 5.25% 2007²		125			124,862
Monumental Global Funding II, Series 2002-A, 5.20% 2007²		125			124,816
CIT Group Inc. 3.65% 2007		125			121,948
Simon Property Group, LP 4.875% 2010		125			121,920
Mangrove Bay Pass Through Trust 6.102% 2033^1,2		125			120,948
John Hancock Global Funding II, Series 2004-A, 3.50% 2009²		125			119,712
Liberty Mutual Group Inc. 6.50% 2035²		125			112,023
					13,236,871


Industrials — 5.39%
Continental Airlines, Inc., Series 2001-1, Class A-2, 6.503% 2011³		385			387,472
Continental Airlines, Inc., Series 1998-1, Class A, 6.648% 2019³		157			157,489
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 2022³		191			201,373
Delta Air Lines, Inc., Series 2000-1, Class A-2, 7.57% 2012³		200			200,875
Delta Air Lines, Inc., Series 2002-1, Class G-2, MBIA insured, 6.417% 2014³		200			204,076
Delta Air Lines, Inc., Series 2002-1, Class G-1, MBIA insured, 6.718% 2024³		155			158,909
Hutchison Whampoa International Ltd. 7.00% 2011²		250			262,041
Hutchison Whampoa International Ltd. 6.50% 2013²		150			154,088
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class G, MBIA insured, 6.664% 2013^2,3		340			352,670
American Airlines, Inc., Series 2001-2, Class A-1, 6.978% 2012³		324			331,189
Northwest Airlines Trust, Series 2, Class A, 9.25% 2014³		126			128,661
Northwest Airlines, Inc., Series 2001-1, Class A-1, 7.041% 2023³		160			159,841
BNSF Funding Trust I 6.613% 2055¹		250			238,781
General Electric Capital Corp., Series A, 6.00% 2012		125			127,907
Union Pacific Railroad Co. Pass Through Trust, Series 2003-1, 4.698% 2024³		122			113,529
Southern Capital Corp. Pass Through Trust, Series 2002-1, Class G, MBIA insured, 5.70% 2023^2,3		70			69,164
Jet Equipment Trust, Series 1994-A, 11.79% 2013^2,4		750			8
					3,248,073


Telecommunication Services — 4.70%
AT&T Wireless Services, Inc. 7.875% 2011		100			108,599
AT&T Wireless Services, Inc. 8.125% 2012		500			554,701
Nextel Communications, Inc., Series E, 6.875% 2013		500			506,072
Nextel Communications, Inc., Series D, 7.375% 2015		150			153,829
SBC Communications Inc. 6.25% 2011		250			255,168
SBC Communications Inc. 5.625% 2016		150			143,863
France Télécom 7.75% 2011¹		250			271,090
Telefónica Emisiones, SAU 7.045% 2036		150			154,558
Telecom Italia Capital SA 7.20% 2036		150			153,447
Verizon Wireless Capital LLC and Cellco Partnership 5.375% 2006		150			149,981
Deutsche Telekom International Finance BV 8.25% 2030¹		125			146,649
Koninklijke KPN NV 8.00% 2010		125			133,493
BellSouth Corp. 6.55% 2034		100			96,823
					2,828,273


Consumer Discretionary — 4.56%
DaimlerChrysler North America Holding Corp. 8.00% 2010		600			641,704
Tele-Communications, Inc. 9.80% 2012		215			249,599
Comcast Corp. 6.50% 2017		150			152,334
Ryland Group, Inc. 5.375% 2012		250			230,540
Toll Brothers, Inc. 5.15% 2015		200			174,277
Seminole Tribe of Florida 5.798% 2013^2,3		150			146,676
News America Inc. 6.40% 2035		150			141,471
Harrah’s Operating Co., Inc. 5.625% 2015		150			140,174
MDC Holdings, Inc. 5.50% 2013		150			137,610
AOL Time Warner Inc. 7.625% 2031		125			134,797
Pulte Homes, Inc. 8.125% 2011		125			132,871
Hyatt Equities, LLC 6.875% 2007²		125			125,856
Royal Caribbean Cruises Ltd. 7.25% 2016		125			124,407
Viacom Inc. 6.875% 2036²		125			120,249
Centex Corp. 5.25% 2015		100			91,007
					2,743,572


Utilities — 4.37%
FPL Energy American Wind, LLC 6.639% 2023^2,3		248			250,807
FPL Energy National Wind, LLC 5.608% 2024^2,3		233			226,070
Commonwealth Edison Co., Series 99, 3.70% 2008		125			121,307
Exelon Generation Co., LLC 6.95% 2011		300			314,652
Midwest Generation, LLC, Series B, 8.56% 2016³		83			87,811
Homer City Funding LLC 8.734% 2026³		295			331,897
Reliant Energy Resources Corp. 7.75% 2011		250			268,853
AES Ironwood, LLC 8.857% 2025³		231			248,109
MidAmerican Energy Holdings Co. 5.00% 2014		225			212,638
Constellation Energy Group, Inc. 6.125% 2009		200			202,459
Duke Capital Corp. 6.25% 2013		125			125,960
Virginia Electric and Power Co., Series 2002-A, 5.375% 2007		125			124,838
PSEG Power LLC 3.75% 2009		125			119,292
					2,634,693


Materials — 1.65%
Norske Skogindustrier ASA 7.625% 2011²		500			509,781
Equistar Chemicals, LP and Equistar Funding Corp. 8.75% 2009		250			258,125
International Paper Co. 5.85% 2012		125			125,310
Stora Enso Oyj 7.25% 2036²		100			100,289
					993,505


Energy — 1.35%
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 2014^2,3		300			295,875
Energy Transfer Partners, LP 5.65% 2012		250			244,114
Ras Laffan Liquefied Natural Gas Co. Ltd. 3.437% 2009^2,3		178			171,112
Qatar Petroleum 5.579% 2011²		100			100,082
					811,183


Health Care — 1.19%
Cardinal Health, Inc. 6.75% 2011		250			258,890
Cardinal Health, Inc. 4.00% 2015		100			86,053
Humana Inc. 7.25% 2006		125			125,000
UnitedHealth Group Inc. 5.20% 2007		125			124,787
Amgen Inc. 4.00% 2009		125			119,796
					714,526


Consumer Staples — 0.62%
Delhaize America, Inc. 8.125% 2011		250			267,232
CVS Corp. 6.117% 2013^2,3		107			107,540
					374,772


Information Technology — 0.62%
Cisco Systems, Inc. 5.25% 2011		250			247,455
Electronic Data Systems Corp., Series B, 6.50% 2013¹		125			124,134
					371,589


MORTGAGE- AND ASSET-BACKED OBLIGATIONS³— 23.33%
Fannie Mae, Series 2000-T5, Class B, 7.30% 2010		250			267,357
Fannie Mae, Series 2001-T6B, 6.088% 2011		250			257,334
Fannie Mae 6.00% 2021		25			25,213
Fannie Mae, Series 2001-4, Class GA, 10.263% 2025¹		40			44,344
Fannie Mae 7.00% 2026		23			23,443
Fannie Mae 7.00% 2031		11			10,955
Fannie Mae 7.50% 2031		9			9,103
Fannie Mae, Series 2001-20, Class C, 12.01% 2031¹		39			43,800
Fannie Mae 6.00% 2034		212			211,041
Fannie Mae 6.00% 2034		175			173,972
Fannie Mae 6.00% 2035		211			210,080
Fannie Mae 5.50% 2036		454			440,791
Fannie Mae 6.50% 2036		16			16,618
Fannie Mae, Series 2001-T10, Class A-1, 7.00% 2041		27			27,194
Government National Mortgage Assn. 8.50% 2008		6			6,436
Government National Mortgage Assn. 10.00% 2020		49			55,465
Government National Mortgage Assn. 6.00% 2036		875			873,731
Countrywide Alternative Loan Trust, Series 2005-62, Class 2-A-1, 5.143% 2035¹		246			246,006
Countrywide Alternative Loan Trust, Series 2005-40CB, Class A-1, 5.50% 2035		226			217,841
Countrywide Alternative Loan Trust, Series 2005-21CB, Class A-17, 6.00% 2035		205			202,483
Countrywide Alternative Loan Trust, Series 2006-16CB, Class A-2, 6.00% 2036		145			143,456
Freddie Mac 8.75% 2008		3			2,948
Freddie Mac 4.00% 2015		195			182,582
Freddie Mac 5.00% 2035		243			229,891
Freddie Mac 5.00% 2035		121			114,806
Freddie Mac 5.50% 2035		120			116,959
Freddie Mac, Series 3156, Class PO, principal only, 0% 2036		124			87,985
ARG Funding Corp., Series 2005-2, Class A-1, AMBAC insured, 4.54% 2009²		500			493,184
ARG Funding Corp., Series 2005-1, Class A-3, MBIA insured, 4.29% 2011²		250			240,681
Chase Commercial Mortgage Securities Corp., Series 1998-2, Class A-2, 6.39% 2030		353			358,421
Chase Commercial Mortgage Securities Corp., Series 2000-1, Class A-2, 7.757% 2032		224			236,471
Residential Funding Mortgage Securities I, Inc., Series 2004-S9, Class II-A-1, 4.75% 2019		240			229,246
Residential Funding Mortgage Securities I, Inc., Series 2004-SA1, Class A-II, 4.325% 2034¹		344			334,769
WaMu Mortgage Pass-Through Certificates Trust, Series 2004-AR1, Class A, 4.229% 2034¹		59			58,110
WaMu Mortgage Pass-Through Certificates Trust, Series 2006-AR2, Class 2-A1, 5.844% 2037¹		243			240,189
WaMu Mortgage Pass-Through Certificates Trust, Series 2005-AR15, Class A-1-A, 5.645% 2045¹		232			233,120
GS Mortgage Securities Corp. II, Series 1998-C1, Class D, 7.20% 2030¹		250			258,318
GS Mortgage Securities Corp. II, Series 1998-C1, Class E, 7.20% 2030¹		250			258,258
Crown Castle Towers LLC, Series 2005-1, Class A-FX, 4.643% 2035²		200			193,867
Crown Castle Towers LLC, Series 2005-1, Class D, 5.612% 2035²		325			320,589
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP4, Class A-2, 4.79% 2042		250			243,330
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP1, Class A-2, 4.625% 2046		250			243,550
GMAC Mortgage Loan Trust, Series 2006-AR1, Class 2-A-1, 5.653% 2036¹		486			481,984
CS First Boston Mortgage Securities Corp., Series 2004-C4, Class A-4, 4.283% 2039		255			241,069
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-3, 5.23% 2040		125			121,629
CS First Boston Mortgage Securities Corp., Series 1998-C1, Class A-1B, 6.48% 2040		115			117,191
Morgan Stanley Capital I, Inc., Series 1998-HF2, Class A-2, 6.48% 2030		423			429,186
SBA CMBS Trust, Series 2005-1, Class D, 6.219% 2035²		320			318,967
L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 2026²		290			308,516
Bear Stearns Commercial Mortgage Securities Inc., Series 2001-TOP2, Class A-2, 6.48% 2035		250			259,251
Morgan Stanley Dean Witter Capital I Trust, Series 2001-TOP5, Class A-3, 6.16% 2035		250			254,497
UPFC Auto Receivables Trust, Series 2005-B, Class A-3, XLCA insured, 4.98% 2011		250			248,555
Wachovia Bank Commercial Mortgage Trust, Series 2005-C17, Class A-2, 4.782% 2042		250			244,416
PG&E Energy Recovery Funding LLC, Series 2005-1, Class A-3, 4.14% 2012		250			241,655
Structured Adjustable Rate Mortgage Loan Trust, Series 2005-22, Class 5-A1, 6.03% 2035¹		222			221,075
CHL Mortgage Pass-Through Trust, Series 2005-HYB8, Class 4-A-1, 5.707% 2035¹		217			213,908
Vanderbilt Mortgage and Finance, Inc., Series 1999-B, Class I-B-1, 8.395% 2016		27			27,204
Vanderbilt Mortgage and Finance, Inc., Series 2001-A, Class B-1, 8.20% 2020		168			171,948
Residential Asset Securities Corp. Trust, Series 2004-KS12, Class A-1-2, 5.615% 2035¹		195			195,707
IndyMac INDX Mortgage Loan Trust, Series 2006-AR5, Class 2-A-1, 5.884% 2036¹		195			193,404
HarborView Mortgage Loan Trust, Series 2005-15, Class 2-A1A2, 6.178% 2045¹		162			164,106
PP&L Transition Bond Co. LLC, Series 1999-1, Class A-7, 7.05% 2009		158			159,366
Cendant Timeshare Receivables Funding, LLC, Series 2005-1, Class A-1, FGIC insured, 4.67% 2017²		145			141,835
LB-UBS Commercial Mortgage Trust, Series 2000-C3, Class A-2, 7.95% 2025		125			134,348
Chase Manhattan Bank — First Union National Bank, Commercial Mortgage Trust, Series 1999-1, Class B, 7.619% 2031		125			132,381
Washington Mutual Securities Corp., Series 2005-AR1, Class A-1-A, 5.645% 2035¹		130			129,842
DLJ Commercial Mortgage Corp., Series 1999-CG1, Class A-1B, 6.46% 2032		125			127,756
Hertz Vehicle Financing LLC, Rental Car Asset-backed Notes, Series 2005-2, Class A-6, AMBAC insured, 5.08% 2011²		125			122,782
Salomon Brothers Commercial Mortgage Trust, Series 2001-C1, Class A-2, 6.226% 2035		118			118,979
GGP Mall Properties Trust, Series 2001-GGP1, Class A-2, 5.007% 2011²		119			118,972
Morgan Stanley Mortgage Loan Trust, Series 2004-3, Class 4-A, 5.694% 2034¹		84			80,678
GMAC Commercial Mortgage Securities, Inc., Series 1997-C1, Class A-3, 6.869% 2029		50			50,789
Structured Asset Securities Corp., Series 1998-RF2, Class A, 8.518% 2027^1,2		47			47,315
Bear Stearns ARM Trust, Series 2003-6, Class I-A-2, 3.984% 2033¹		43			42,434
Nomura Asset Securities Corp., Series 1998-D6, Class A-1A, 6.28% 2030		7			7,499
					14,053,181


U.S. GOVERNMENT & GOVERNMENT AGENCY BONDS & NOTES — 14.69%
U.S. Treasury 3.625% 2009⁵		1,125			1,085,535
U.S. Treasury 14.00% 2011		450			461,461
U.S. Treasury 4.25% 2013		1,600			1,535,504
U.S. Treasury 12.50% 2014		1,200			1,454,628
U.S. Treasury 11.25% 2015		800			1,145,752
U.S. Treasury 4.50% 2036		2,475			2,260,368
Fannie Mae 5.25% 2007		500			498,975
Freddie Mac 5.50% 2011		400			403,988
					8,846,211


MUNICIPALS — 1.61%
State of California, Golden State Tobacco Securitization Corp., Tobacco Settlement Asset-backed Bonds, Series 2003-A-1, 6.25% 2033		325			355,417
State of Wisconsin, Badger Tobacco Asset Securitization Corp., Tobacco Settlement Asset-backed Bonds, 6.125% 2027		260			276,445
State of South Dakota, Educational Enhancement Funding Corp., Tobacco Settlement Asset-backed Bonds, Series 2002-A, Class A, 6.72% 2025		169			166,231
State of North Carolina, Eastern Municipal Power Agency, Power System Revenue Refunding Bonds, Federally Taxable, Series 2003-E, 5.55% 2014		125			119,826
State of Louisiana, Tobacco Settlement Financing Corp., Tobacco Settlement Asset-backed Bonds,
Series 2001-A, Class A, 6.36% 2025		50			50,044
					967,963


NON-U.S. GOVERNMENT BONDS & NOTES — 0.37%
Israeli Government 7.50% 2014		ILS935		$	225,315


Total bonds & notes (cost: $53,236,150)					52,049,727


Preferred securities — 8.33%		Shares

FINANCIALS — 8.33%
BNP U.S. Funding LLC, Series A, 7.738% noncumulative preferred^1,2		375,000			384,356
BNP Paribas 5.186% noncumulative^1,2		300,000			277,775
BNP Paribas Capital Trust 9.003% noncumulative trust preferred^1,2		150,000			167,500
Fannie Mae, Series O, 7.625% preferred^1,2		15,000			810,000
HSBC Capital Funding LP, Series 1, 9.547% noncumulative step-up perpetual preferred^1,2		400,000			451,231
Fuji JGB Investment LLC, Series A, 9.87% noncumulative preferred^1,2		360,000			386,465
Deutsche Bank Capital Funding Trust I, 7.872%^1,2		300,000			315,640
MUFG Capital Finance 1 Ltd. 6.346% noncumulative preferred¹		300,000			292,555
Swire Pacific Capital Ltd. 8.84% cumulative guaranteed perpetual capital securities²		10,000			281,563
ING Capital Funding Trust III 8.439% noncumulative preferred¹		250,000			275,503
National Bank of Canada, Series A, 8.35% exchangeable preferred depositary shares		10,000			264,600
Resona Preferred Global Securities (Cayman) Ltd. 7.191%²		250,000			255,123
Wachovia Capital Trust III 5.80%¹		250,000			246,195
Shinsei Finance II (Cayman) Ltd. 7.16% noncumulative preferred^1,2		250,000			238,437
Chuo Mitsui Trust and Banking Co., Ltd. 5.506%^1,2		250,000			233,777
DBS Capital Funding Corp., Series A, 7.657% noncumulative guaranteed preference shares^1,2		125,000			134,332

Total preferred securities (cost: $4,925,404)					5,015,052



Short-term securities — 5.39%		Principal amount (000	)

Becton, Dickinson and Co. 5.22% 8/7/2006	$	1,000			998,985
Caterpillar Inc. 5.24% 8/1/2006²		900			899,869
Hewlett-Packard Co. 5.25% 8/9/2006²		850			848,884
E.I. duPont de Nemours and Co. 5.23% 8/4/2006²		500			499,710

Total short-term securities (cost: $3,247,448)					3,247,448


Total investment securities (cost: $61,409,002)					60,312,227
Other assets less liabilities					(92,339	)

Net assets				$	60,219,888

¹ Coupon rate may change periodically.

² Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to the public may require registration. The total value of all such restricted securities was $16,408,589, which represented 27.25% of the net assets of the fund. Certain restricted securities may nonetheless trade actively among eligible investors.

³ Pass-through securities backed by a pool of mortgages or other loans on which principal payments are periodically made. Therefore, the effective maturities are shorter than the stated maturities.

⁴ Scheduled interest and/or principal payment was not received.

⁵ This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future.

MFGEFP-985-0906-S6853

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INVESTMENT PORTFOLIO

To the Shareholders and Board of Trustees of Endowments:

We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the financial statements of Endowments (the “Trust”), comprising the Growth and Income and Bond Portfolios, as of July 31, 2006, and for the year then ended and have issued our report thereon dated September 14, 2006, which report and financial statements are included in Item 1 of this Certified Shareholder Report on Form N-CSR. Our audits also included the Trust’s investment portfolios (the “Schedules”) as of July 31, 2006 appearing in Item 6 of this Form N-CSR. These Schedules are the responsibility of the Trust’s management. Our responsibility is to express an opinion based on our audits. In our opinion, the Schedules referred to above, when considered in relation to the basic financial statements taken as a whole of the Trust referred to above, presents fairly, in all material respects, the information set forth therein.

DELOITTE & TOUCHE LLP

September 14, 2006

Costa Mesa, California

ITEM 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.

ITEM 8 - Portfolio Managers of Closed-End Management Investment Companies

Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.

ITEM 9 - Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.

ITEM 10 - Submission of Matters to a Vote of Security Holders

There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees since the Registrant last submitted a proxy statement to its shareholders. The procedures are as follows. The Registrant has a Committee on Governance comprised solely of persons who are not considered ‘‘interested persons’’ of the Registrant within the meaning of the Investment Company Act of 1940, as amended. The committee periodically reviews such issues as the Board’s composition, responsibilities, committees, compensation and other relevant issues, and recommends any appropriate changes to the full Board of Trustees. While the committee normally is able to identify from its own resources an ample number of qualified candidates, it will consider shareholder suggestions of persons to be considered as nominees to fill future vacancies on the Board. Such suggestions must be sent in writing to the Committee on Governance of the Registrant, c/o the Registrant’s Secretary, and must be accompanied by complete biographical and occupational data on the prospective nominee, along with a written consent of the prospective nominee for consideration of his or her name by the Committee on Governance.

ITEM 11 - Controls and Procedures

(a)	The Registrant’s Principal Executive Officer and Principal Financial Officer have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures (as such term is defined in Rule 30a-3 under the Investment Company Act of 1940), that such controls and procedures are adequate and reasonably designed to achieve the purposes described in paragraph (c) of such rule.

(b)	There were no changes in the Registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

ITEM 12 - Exhibits

(a)(1)	The Code of Ethics that is the subject of the disclosure required by Item 2 is attached as an exhibit hereto.

(a)(2)	The certifications required by Rule 30a-2 of the Investment Company Act of 1940, as amended, and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are attached as exhibits hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ENDOWMENTS

	By /s/ Robert G. O'Donnell
	Robert G. O'Donnell, Vice Chairman and PEO

	Date: October 6, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

By /s/ Robert G. O'Donnell

Robert G. O'Donnell, Vice Chairman and PEO

Date: October 6, 2006

By /s/ Susi M. Silverman

Susi M. Silverman, Treasurer and PFO

Date: October 6, 2006

Endowments Inactive N-CSRCertified annual shareholder report (management investment company)